) reported first-quarter 2014 non-GAAP earnings of 42 cents,
which decreased 10.6% from the year-ago quarter. Including
stock-based compensation, earnings came in at 31 cents per share
which lagged the Zacks Consensus Estimate by 4 cents.
Revenues for the quarter not only decreased 3.1% year over
year to $570.4 million but also failed to beat the Zacks
Consensus Estimate of $586 million. Revenues were affected by
lower license revenues (down 8.9% year over year). However, a
5.8% increase in the subscription revenues arrested the decline
in total revenue.
Autodesk had realigned its revenue segment with revenues from
cloud service offerings from License and Other Revenues to its
new revenue item Subscription Revenues. Now, Autodesk's
Subscription Revenues comprises two components namely,
maintenance revenues and revenues from cloud service
Segment wise, revenues from the Manufacturing segment and
Platform Solutions and Emerging Business ("PSEB") were down 4%
and 6% respectively, on a year-over-year basis. Moreover,
Autodesk's Media and Entertainment segment recorded a revenue
decline of 8% year over year.
However, revenues from Architecture, Engineering and
Construction (AEC) increased 4% from the year-ago quarter.
Though, Autodesk reported an 8% increase in revenues from Suites,
revenues from its Flagship products were down 9% year over
Geographically, decline in revenues from Asia Pacific (down
3.0% from the year-ago quarter), EMEA (down 4.0% year over year)
and the Americas (down 3% year over year) led to the revenue
Moreover, revenues from emerging economies, which represented
13.0% of the total revenue, were down 8% on a year-over-year
Gross profit on a non-GAAP basis decreased 4.8% from the
year-ago quarter to $515.2 million. Gross margin came in at 90.3%
compared with 91.9% in the year-ago quarter. The decline was
primarily due to lower revenues and unfavorable revenue mix.
Including stock-based compensation, gross margin came in at
Operating expenses on a non-GAAP basis decreased 4.4% from the
year-ago quarter, to $378.3 million, due to lower marketing and
sales expenses (down 6.7% year over year) and research and
development expenses (down 1.2% year over year). General and
administrative expenses were also down 4.4% from the year-ago
Moreover, operating expenses, as a percentage of revenue,
contracted 100 basis points (bps) to 66.3% in the quarter.
Including stock based compensation, operating expenses came in at
Non-GAAP operating income decreased 5.6% from the year-ago
quarter to $136.9 million. Operating margin contracted 60 bps
from the year-ago quarter to 24.0%, primarily due to lower
revenue base. Including stock-based compensation of $33.5
million, operating income came in at $103.4 million.
Net Income on a non-GAAP basis was down 11.7% year over year
to $96.3 million. Including stock-based compensation, net income
came in at $71.9 million.
Autodesk exited the first quarter with total cash and cash
equivalents of $1.66 billion million compared with $1.61 billion
in the previous quarter. Cash flow from operating activities was
$224.1 million compared with $156.0 million in the prior
For the second quarter of 2014, Autodesk expects revenues in
the range of $550 million-$570 million and earnings per share in
the range of 39 cents - 44 cents on a non-GAAP basis.
Autodesk revised its fiscal 2014 guidance, which reflects a
growth of 3% (down from 6% from an earlier forecast) in revenues.
Autodesk expects operating margins to expand 50 - 100 bps, down
from previous forecast of a 125 - 150 bps expansion, compared to
Autodesk's first-quarter results were marred by mixed macro
economic environment and soft end-market demand. However,
Autodesk witnessed continued demand for design related
Moreover, going forward, Autodesk's new cloud-based offerings
are expected to gain traction. Autodesk's focus on expanding its
mobile applications for both
) iOS and
) Android platform will further drive market share, going
However, sluggish macro-economic environment, weakness in
emerging markets, customer concentration and increasing
Adobe Systems Inc.
) are the major concerns. Moreover, continued investments in news
products are expected to hurt margins in the near term. These
factors have prompted Autodesk to revise down its fiscal 2014
Currently, Autodesk has a Zacks Rank #4 (Sell).
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